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There is no such thing as the "Coasian bargaining solution". This is a simple principle according to which parties find an agreement somewhere on the Pareto frontier when they bargain, which means that the outcome of the bargaining process is socially efficient (abstracting from equity issues). The Nash bargaining solution refines our predictions by ...


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This should probably be a comment, but it's too long so I am posting it as an answer. I'm not sure I necessarily agree with "[A Pigouvian tax] is a fixed unit price, which cannot be efficient if the damage costs are highly non-linear." But I do definitely agree with the fact that non-linearity causes practical problems for a Pigovian implementation, as I ...


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